Q.4. “ In the villages itself no
form of credit organization will be suitable except the cooperative society.”---- All India Rural Credit serve rural clients?
Discuss this statement in the background of agricultural finances in India. What constraints and challenges do financial institutions supplying agricultural finance face? How can technology be used to better reach and serve rural clients?
Ans: Almost
all the committees or working groups constituted to report on rural credit
system in India since Royal Commission On Agriculture (1928) have opined that
from the point of view of structural appropriateness, there is no alternative
to cooperatives for provision of rural credit. The given observation made by All
India Rural Credit Survey also reaffirms this opinion. The survey highlights
the importance of cooperatives and shortcomings of other financial institutions
supplying agricultural finances in India. These institutions are making
strident efforts to cope with the credit requirements of the farmers. However,
there are certain serious constraints and challenges faced by these
institutions. They are as follow:
A. Inadequate Availability
Availability of credit is inadequate
compared with its requirement. Undoubtedly, the value of flow of credit has
substantially increased over time. Yet, it continues to be less in relation to
demand. There has been an exponential growth in demand for agricultural credit
over time. It is partly because the farmers are shifting from non-institutional
to institutional sources of credit. It is also because of expansion of
commercial agriculture and a substantial rise in prices of modern agricultural
inputs.
B. Dismal Recovery
The recovery of credit has been far
from satisfactory. This impedes the process of further lending. Nearly 40-42
per cent of the loans have remained unrecovered during the last 4 years.
C. Marginalization Of Small Holders
In the matter of availability of
credit small holders are often marginalized. This is owing to their low
capacity to offer collateral for the loans. Accordingly, even when availability
of credit has multiplied over time, those in dire need are often left high and
dry.
D. Unproductive Use
While on the one hand funds are
scarce, on the other, unproductive use of credit continues to be a serious
menace. The farmers in India are accustomed to make huge expenditure on family
functions. This significantly reduces the very purpose of various agencies
engaged in agricultural finances.
E. Red –Tapism
Red- tapism has become a standard
practice in official matters. Formalities are so cumbersome in obtaining
institutional loans that the farmers are often compelled to divert upon to the
non-institutional sources.
F. Ignorance Of Farmers
Ignorance of farmers and lack of
awareness among them has always worked as a serous impediments to serve rural
farmers.
Technology can be used to educate and
identify poor farmers. Delivery of funds to them can also be made speedy and efficient
using technologies such as mobile banking. Farmers should be issued pass books
linked to their aadhar- card showing details of their land and fixed assets . This
will streamline the procedure for the grants of loans, avoiding much of
red-tapism.
Vashistha Ray.
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